Westpier Consultants Limited and Global Metal Exchange Limited, two companies that sold rare earth metals at hugely inflated prices to the public while grossly exaggerating the rate of return on investment, were wound up in the High Court on 12 March 2014, following an investigation by the Insolvency Service.
The two companies, which sold the rare earth metals on behalf of suppliers Denver Trading Limited and Denver Trading AG (the Denver companies), inflated the price by between 300-500 percent, while promising a return on investment of around 200 percent in two years.
The Denver companies are themselves currently in provisional liquidation following Insolvency Service petitions to wind the companies up presented at the High Court on 18 December 2013.
In reality customers had almost no prospect of making any investment returns, given the huge mark ups they paid for their purchases. One investor who tried to sell the stock he had bought through Westpier Consultants Limited was told that the selling price was just 10 percent of his original investment.
David Hill, a Chief Investigator at the Insolvency Service, said:
These two companies were carrying out the ultimate scam. Not only did they sell the rare earth metals at an inflated price, they also lured investors in by promising high yields once the stock was sold which was just hot air.
The court has taken a dim view of this behaviour and wound up the companies, a result would-be scammers should take seriously.
Both companies took up to 50 percent of the selling price as fees, most which was used to pay commissions to sales staff. The companies also lied to customers about the size of their commission while customers had no access to their stock as it was held in the name of either of the Denver companies.
Westpier Consultants Limited also promoted an unauthorised collective investment scheme, by selling of part ownership of mining rights in gold mines in Ecuador. The promotion and sale of collective investment schemes are controlled by the Financial Conduct Authority (FCA).
The FCA has issued a warning concerning companies that have approached individuals to sell precious metals as an investment, using high pressure sales tactics and targeting vulnerable consumers. The warning set out that the Authority had yet to see any convincing evidence that there is a viable market for retail investors to make money from investments in rare earth metals. FCA warnings are posted on the website www.fca.gov.uk